NSW Solar Update: IPART terms of reference released for next feed-in tariff

The NSW government bureaucratic machinery has been set into motion to determine what will be “a fair price for solar power”–‘fair’ depending of course on whose interests you happen to support. The Independent Pricing and Regulatory Tribunal (IPART) has at last received the government-set parameters within which they will determine who gets paid how much for solar electricity fed into the grid. The NSW solar industry still remains in limbo after the NSW Solar Bonus Scheme crisis, however, and is not likely to see any relief until IPART issues its final report–in April 2012.

(Update 15 March 2012: IPART has released its final recommendations for a new NSW Solar Bonus Scheme Feed-in Tariff.)

What is IPART?

IPART stands for the Independent Pricing and Regulatory Tribunal. It is an NSW statutory government body that determines the retail tariff (the price you pay for electricity) offered by NSW’s standard electricity retailers–i.e. EnergyAustralia, Country Energy/Origin Energy, Integral Energy/Origin Energy. In addition to setting these rates and the state’s solar feed-in tariffs (if any), IPART also oversees pricing for the gas, water, and transport industries in the state.

Please keep in mind that Renewable Energy Certificates (RECs, otherwise known as Small-scale Renewable Energy Certificates or ‘STCs’) are part of the federal government rebate scheme and are separate from state-to-state feed-in tariffs.

IPART to advise on the rate for the future of the NSW solar feed-in tariff. How and when?

IPART must be asked by the government to make recommendations on prices. It does not have the authority to tell the government what to do; only to give advice on what the best path may be. The government first issues a set of ‘terms of reference’, the framework within which IPART must make its recommendations.

IPART has been requested to undertake a review of the NSW feed-in tariff by the government, and announced the terms of reference today. Unfortunately, there is no rosy news for the solar industry in them; although an issues paper will be published in August, followed by a draft report by November 2011, the final determination will not be available until April 2012.

The wait will feel interminably long time for a solar power industry that has seen a severe drop-off in business since the Solar Bonus Scheme came to an abrupt and sudden halt in April 2011.

Two tasks for IPART:  Recommend a future feed-in tariff rate, and try to mitigate current FiT costs

IPART has been asked to undertake two tasks for the NSW government in relation to the feed-in tariff.

1. Review and recommend a new feed-in tariff for non Solar Bonus Scheme participants–i.e. future feed-in tariff recipients. The key components of the review will include how to determine the following:

-‘a fair and reasonable value’ for electricity generated by small-scale solar pv plants (usually rooftop solar) that feed electricity into the grid. The final feed-in tariff mechanism will not benefit from government funding, and must not result in a price increase for retail electricity customers in the state.

-how the feed-in tariff should be implemented (e.g. a minimum rate, or guidelines for negotiations between retailers and customers)

-whether comprehensive system modeling is required to evaluate the impacts of small-scale solar PV generation on network costs (positive or negative)

2. Find ways to mitigate the ongoing costs of the NSW Solar Bonus Scheme over the remaining 5 years of its life by requiring retailers to contribute to the cost of the scheme, and reflecting the financial benefit that will arise from electricity from PV units. (Current Solar Bonus feed-in recipients will not be affected.)

© 2011 Solar Choice Pty Ltd

Sources and links:

Terms of reference for the future of NSW’s feed-in tariff (pdf)

Previous related Solar Choice blog: “NSW prices to rise by up to 18.1% by July 2011–IPART

James Martin II